Biden administration grants automatic student loan forgiveness to 325,000 permanently disabled borrowers

The Biden administration moved Thursday (Aug. 19, 2021)  to grant 325,000 people who are severely disabled automatic federal student loan forgiveness to the tune of $5.8 billion, setting the stage for reforms to a process that is widely criticized as cumbersome and onerous.

“The Department of Education is evolving practices to make sure that we’re keeping the borrowers first and that we’re providing relief without having them jump through hoops,” Education Secretary Miguel Cardona said on a call with reporters Thursday. “I’ve heard from borrowers over the last six months that the processes are too difficult so we’re simplifying it.”

By law, anyone who is declared by a physician, the Social Security Administration or Department of Veterans Affairs to be totally and permanently disabled is eligible to have their federal student loans discharged. The benefit has never been widely publicized, so few have taken advantage. And when they do, many are met with tedious paperwork and requirements.


There is a three-year monitoring period in which borrowers must submit annual documentation verifying their income does not exceed the poverty line. The requirement routinely trips up people who wind up having their loans reinstated. To ease the burden, the Biden administration in March waived the paperwork requirement during the coronavirus pandemic, retroactive to March 13, 2020, when President Donald Trump declared a national emergency.

On Thursday, Cardona said the Education Department will indefinitely extend the income waiver. The department will also pursue the elimination of the requirement altogether through the negotiated rulemaking process in October. The federal agency is proposing new rules to provide automatic disability discharges for anyone identified as eligible through data matching initiatives with Veterans Affairs and the Social Security Administration.

In 2016, the Education Department partnered with the two other agencies to identify eligible borrowers. While the department removed the application requirement in 2019 for veterans, it did not do the same for people identified through the SSA match. Only half of the people identified through the SSA match have received the discharge, according to the Education Department.

A bipartisan coalition of congressional lawmakers, including Sens. Chris Coons, D-Del., and Rob Portman, R-Ohio, had urged Trump to automatically discharge the debt, much like his administration had done in 2019 for permanently disabled veterans. But the Trump administration failed to act, while hundreds of thousands of disabled borrowers defaulted on their loans.

A Freedom of Information Act request made by the D.C.-based nonprofit National Student Legal Defense Network found over 517,000 individuals as of May had not received relief.

Asked about the discrepancy between the May figure and the 325,000 announced Thursday, Ben Miller, a senior adviser at the Education Department, said the older figure likely includes duplicates that may be showing up in multiple matches. He assured the latest figure accounts for all of the borrowers currently on the books.

“Obviously, we anticipate there will be new matches each quarter,” Miller said. “This is not just a one-time action.”

Eligible borrowers will receive notice of their approved discharge in September and the department expects cancellation will occur by the end of the year. People who wish to opt-out of forgiveness will be given the opportunity. While borrowers will not be subject to federal income taxes on the canceled debt, they may encounter state taxes.

Consumer groups had urged the Biden administration to automatically discharge the federal student loans of eligible borrowers, rather than require them to submit an application for debt forgiveness. Many were disappointed when the Education Department announced the income waiver in March without automating the process. Advocates praised the administration Thursday for stepping up.

“This is a life-altering announcement for hundreds of thousands of student loan borrowers with disabilities,” Dan Zibel, chief counsel at the National Student Legal Defense Network. “Today’s step is another indication that the Department is listening to the voices of student loan borrowers.”



Please enter your comment!
Please enter your name here

Yes, I would like to receive emails from DESI TALK Headlines!. Sign me up!

By submitting this form, you are consenting to receive marketing emails from: News India Times | Desi Talk Headlines | Desi Talk Chicago, 1655 Oak Tree Road, Edison, NJ, 08820, http://Parikh Worldwide Media. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact